Yesterday, Liberty Global Inc. (LBTYA - Analyst Report) decided to enhance its shareholders’ wealth. The company declared that its board of directors has decided to authorize a $3.5 billion stock repurchase program over the next two years. The ongoing $1 billion stock repurchase program of the company will no longer be applicable.
In Feb 2013, Liberty Global had decided to acquire a 100% stake in the British cable MSO, Virgin Media, in a cash and equity deal. On Jun 7, 2013, Liberty Global completed the acquisition. The deal was worth around $15.8 billion or an enterprise value of nearly $23.3 billion.
The acquisition makes Liberty Global the largest cable TV MSO (multi service operator) in the world, surpassing Comcast Corp. (CMCSA - Analyst Report), the largest cable MSO in the U.S. Together, Liberty Global and Virgin Media will have approximately 25 million subscribers compared with nearly 22 million subscribers of Comcast. In the U.K., the merged entity will become a formidable challenger to British Sky Broadcasting Group plc., which is the largest pay-TV operator in the U.K. and is partially controlled by News Corp. (NWSA - Analyst Report).
Liberty Global is gradually establishing a strong foothold in the European cable TV market. On Apr 2013, Liberty Global acquired a 12.65% ownership of Ziggo, the largest cable MSO in Netherlands. Ziggo also competes with telecom operators such as, Royal KPN N.V. and Vodafone Group plc. (VOD - Analyst Report). Liberty Global currently has a Zacks Rank #3 (Hold).
We believe that the long-term business fundamental of the company is very intriguing, primarily due to a strong demand for its digital cable-TV services, faster broadband and triple-play bundled offerings. The acquisition of Virgin Media will enable Liberty Global to explore U.K., which is one of the most lucrative markets in Europe.